S&P 500 Stochastic Momentum Signal

In a note on 9/21/21, I reviewed several models I was monitoring to identify a low-risk entry point during the current market drawdown. As of Friday's close, none of the models have issued an alert. That's the nature of utilizing a model-driven approach. One must remain patient. 

While I predominantly monitor breadth-based models to identify market momentum, I use a handful of ETF/Index price-based indicators to generate thrust signals.

One of those models is the fast stochastic thrust model, and it issued an alert at the close on trading on 10/15/21. 

Let's assess the outlook for the S&P 500 index when historical instances have occurred in the past.

Please click here for the original fast stochastic thrust concept note. 

CURRENT DAY CHART

HOW THE SIGNALS PERFORMED

Results look good in the short-term with a significant risk/reward profile in the 1-month window. Since 1985, the 1-week time frame has registered 22/25 winners.